The US government on Tuesday slashed its estimate of domestic corn production this year as heavy rain in key growing areas throughout the spring forced growers to cut their acreage and caused planting delays that threatened the size of the harvest.
"Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects," the US Agriculture Department said in its monthly World Agricultural Supply and Demand Estimates report.
The corn troubles are the latest blow to US farmers struggling with lost markets and trade wars. The US corn harvest will fall to a four-year low of 13.680 billion bushels, based on an average yield of 166.0 bushels per acre, the report said.
"The USDA ripped the Band-Aid off by lowering yield by 10 bushels and then also lowering acreage as well," said Ted Seifried, chief ag market strategist at Zaner Group. "The USDA is verifying a lot of our fears."
Chicago Board of Trade corn futures turned higher after the report was released, rallying to a one-week high.
The reduced harvest will cut 2019/20 corn ending stocks to 1.675 billion bushels, down 23.7 percent from a year earlier and their lowest since the 2013/14 marketing year.
USDA left its 2019/20 supply projections for soyabeans unchanged, at 4.150 billion bushels for harvest and 49.5 bushels per acre for yield.
On the demand side, the government trimmed its soyabean export projection for the 2018/19 crop year to 1.700 billion bushels from 1.775 billion a month ago amid the ongoing trade fight with China. USDA raised its outlook for 2018/19 May ending stocks to 1.070 billion bushels from 995 million due to the reduced exports.
Soyabean ending stocks for 2019/20 were raised to 1.045 billion bushels from the May outlook for 970 million bushels. It left its soyabean export forecast for 2019/20 unchanged, at 1.950 billion bushels.
Soyabean futures briefly turned higher before retreating to negative territory.
Analysts had been expecting the report to peg 2019/20 US corn production at 14.251 billion bushels, based on an average yield of 172.4 bushels per acre, according to the average of estimates in a Reuters poll.
A month ago, USDA had forecast 2019/20 corn production of 15.030 billion bushels, with average corn yield coming in at 176.0 bushels per acre. Domestic corn ending stocks had been seen at 2.485 billion bushels.
The average of analysts' expectations for soyabean production was 4.123 billion bushels, based on a yield of 49.0 bushels per acre.
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